Yen on Watch This Week
USDJPY is on watch this week with two major event catalysts in focus. First we have the May BOJ meeting on Thursday, followed by the US jobs report on Friday. The pair is starting the week on a neutral footing with price hovering around the weekly open as of writing, though still up off last week’s lows for now. Alongside those two events, traders will also be closely monitoring incoming headlines around US/China trade news as well as US/Japan trade news.
No US/Japan Currency Talks
US and Japanese officials met last week for talks and there was plenty of speculation that any trade deal include a provision on currency rates aimed at keeping JPY higher and USD lower. However, a top Japanese diplomat has refuted media claims that Scott Bessent pushed for a stronger Yen, saying that there were no such discussions at the meeting.
BOJ & US Jobs Data
Looking to the BOJ meeting first this week, the bank is widely expected to hold rates steady at 0.5% amidst rising economic risks linked to the ongoing US trade war. If the bank is heard taking a more concerned tone over these risks, near-term tightening expectations will weaken, leading JPY lower. However, if the BOJ takes a more resilient tone, pledging commitment to its tightening path, this should keep JPY supported on the back of the meeting. Focus will then shift to the US jobs report where any fresh weakness should see USDJPY moving lower into next week. However, any upside surprise could fuel a fresh short-squeeze in USD here.
Technical Views
USDJPY
The sell off in USDJPY has stalled for now into the 140.42 area and the bear channel lows. While this area holds, a further rotation higher towards 147.15 and the bear channel highs can be seen. If we break lower again, however, 137.80 will be the deeper level to watch. In the Signal Centre today we have an active short signal in play from 143.78, suggesting a preference to fade the correction for a return move lower.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.